What is Safety stock?
Safety stock: Extra inventory kept to avoid running out when demand or supply surprises you.
Where Safety stock fits
Safety stock is part of Logistics in Supply Chain. Logistics moves goods from supplier to customer: procurement, warehousing, freight and last-mile delivery. Safety stock guards against surprises; just-in-time cuts inventory.
Practical tip
Balance service level against holding cost.
Related terms
- Supply chain
- The network that moves a product from raw materials to customers.
- Just-in-time
- Receiving goods only when they are needed, to keep stock low.
- Lead time
- Time between placing an order and receiving it.
- Procurement
- The process of finding and buying what a business needs.
- Inventory
- Goods a company holds to sell or use.
- Warehouse
- A building used to store goods.
- Distribution center
- A facility that receives goods and ships them to customers.
- Freight
- Goods moved in bulk by road, rail, sea or air.
Formulas you will use with it
Test yourself
Which term means: “Extra inventory kept to avoid running out when demand or supply surprises you.”?
Supply chain · Inventory · Safety stock
Answer: Safety stock
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